Correlation Between Vivendi SE and Warner Music
Can any of the company-specific risk be diversified away by investing in both Vivendi SE and Warner Music at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vivendi SE and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vivendi SE and Warner Music Group, you can compare the effects of market volatilities on Vivendi SE and Warner Music and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vivendi SE with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivendi SE and Warner Music.
Diversification Opportunities for Vivendi SE and Warner Music
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vivendi and Warner is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SE and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and Vivendi SE is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vivendi SE are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Vivendi SE i.e., Vivendi SE and Warner Music go up and down completely randomly.
Pair Corralation between Vivendi SE and Warner Music
Assuming the 90 days trading horizon Vivendi SE is expected to generate 1.26 times more return on investment than Warner Music. However, Vivendi SE is 1.26 times more volatile than Warner Music Group. It trades about 0.09 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.03 per unit of risk. If you would invest 258.00 in Vivendi SE on November 3, 2024 and sell it today you would earn a total of 15.00 from holding Vivendi SE or generate 5.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vivendi SE vs. Warner Music Group
Performance |
| Timeline |
| Vivendi SE |
| Warner Music Group |
Vivendi SE and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vivendi SE and Warner Music
The main advantage of trading using opposite Vivendi SE and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SE position performs unexpectedly, Warner Music can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Warner Music will offset losses from the drop in Warner Music's long position.| Vivendi SE vs. Coeur Mining | Vivendi SE vs. Ross Stores | Vivendi SE vs. FIREWEED METALS P | Vivendi SE vs. GREENX METALS LTD |
| Warner Music vs. Autohome ADR | Warner Music vs. INVITATION HOMES DL | Warner Music vs. MEDICAL FACILITIES NEW | Warner Music vs. ADDUS HOMECARE |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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